Finance and Trade are expected to make up 13% of KSAs GDP CAGR into 2030. This part of the series will provide analysis on these two industries and their expected changes as part of the country’s evolution.
KSA’s GDP is as Large as All Other GCC Countries Combined
Saudi Arabia has the largest GDP in the GCC and MENA region. The chart below comparesKSA’s GDP to its GCC counterparts.
- Kingdom of Saudi Arabia’s GDP is almost as large as all other GCC countries combined
- All GCC GDPs follow similar cycles of highs and lows
- 2020 GDPs are expected to contract globally due the pandemic, but J&A expects theKSA GDP to continually climb as the government spending increases in 2021 and beyond
International Trade – KSA Makes up Nearly 30% of GCC Imports and Exports
Saudi Arabia alone accounts for almost 20% and 25% of MENA’s imports and exports respectively. There are 19 countries in MENA. Exports out of the KSA consist mostly of raw materials, transportation, and machinery. Due to KSA’s size, it can increase its regional exports apart from fuel. KSA has the ability to import more tourism, hospitality, and leisure services and technology once these industries are more developed.
Investments in finance and trading infrastructure are expected to grow KSA’s GDP by 150Billion through 2030. This growth will be challenging, as fundamental legal frameworks need to be established for effective SME lending and capital markets. KSA’s investment in trading infrastructure will become a more powerful driver as the manufacturing capacity of the country also begins to increase and the state grows as a distribution hub in the region.
Small and Medium Business Lending Lags Behind Comparable Economies
SME lending and trade finance are essential elements to grow any economy. It is estimated nearly 40% and 100 million of global jobs are a result of small and medium businesses. GCC countries average lending to SME’s is far behind other MENA countries. KSA and the UAE lend less than 5% of total funds to SMEs, whereas non-GCC countries place 15% of total lending intoSME businesses.
J&A completed a deep dive of KSA imports and exports in its Global Trade newsletter. The entire series can be located here . 60% of KSA’s exports are fuel; imports and raw materials make up approximately 80% of the state’s imports. KSA holds the second most oil reserves in the world next to Venezuela.
Small and medium business lending is key to development of GDP growth. Globally, SMEs account for 23% of GDP.
- KSA is behind its regional counterparts in SME lending and financing
- To successfully implement more advanced SME lending, KSA will need to privatize several industries and implement a legal framework that can apply to international business owners as well as domestic ones
SME lending is an essential activity to enable economic growth in the private sector. There is significant room for growth in lending to small and medium-sized business, as well as in better provision of financial services to households, including mortgages and investment products inGCC countries. Households play an important role in growing the KSA economy through savings.
- A monthly incomes are adjusted for income tax, reserve assets plus government stock market equity, and interest payments
- Monthly incomes have steadily increased since 2005, and are expected to continue increasing into 2030
- A is less dependent on international workers compared to its GCC counterparts such as the UAE. This allows the company to invest in its citizens on a larger scale.
The next part of our series will take a deeper look at manufacturing and healthcare within the context of KSA’s 2030 vision growth.